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Crime Oct 03, 2022
Eva Rinaldi (wikipedia/CC BY-SA 2.0)
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Kim Kardashian has agreed to pay a $1.26 million fine to the Securities and Exchange Commission to settle civil allegations that she trumpeted a cryptocurrency on social media without disclosing she was paid for the promotion, the SEC announced Monday.
According to the agency, Kardashian failed to disclose that she was paid $250,000 to tout EthereumMax on her Instagram account with 330 million followers.
In addition to paying the fine, Kardashian agreed to cooperate with the SEC’s ongoing investigation, the financial regulator said.
“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chair Gary Gensler said in a statement. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
A representative for Kardashian could not immediately be reached for comment.
According to the SEC, Kardashian’s social media post trumpeting EMAX tokens, the crypto asset security being offered by EthereumMax, contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities,” Gensler added.
The SEC’s order found that Kardashian violated the anti-touting provision of federal securities laws. Without admitting or denying the SEC’s findings, Kardashian agreed to pay $1.26 million — $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1 million penalty.
Kardashian also agreed to not promote any crypto asset securities for three years.
“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” said Gurbir S. Grewal, director of the SEC’s enforcement division. “Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
